Pa. Gov. Josh Shapiro’s budget proposal includes Regional Greenhouse Gas Initiative

Gov. Josh Shapiro’s proposed budget assumes Pennsylvania will charge power plants for their carbon dioxide pollution and raise more than $600 million in the next year. 

Former Gov. Tom Wolf’s Administration pushed for more than two years to get the state into the Regional Greenhouse Gas Initiative, a cap-and-trade program among 12 states. The regulation allowing Pennsylvania to join has been on hold since July because of a court challenge. 

Shapiro did not talk about RGGI in his budget address Tuesday but said, “We must reject the false choice between protecting jobs and protecting our planet. I believe we can do both — we can embrace the Commonwealth’s role as an energy leader, create good paying jobs, and fulfill our constitutional obligation to protect Pennsylvania’s clean air and pure water.”

As a candidate, Shapiro said he was concerned RGGI would not provide the right balance of reducing emissions while protecting jobs. 

His administration says including the program in the budget does not indicate a change in the governor’s stance, but accounts for the program should it be allowed to move forward. 

GOP says RGGI would hurt Pa.’s economy

Republican lawmakers opposed the effort, saying it would hurt the state’s energy economy and eliminate jobs in coal communities. The legislature tried several times to stop the program, but failed. 

State Rep. Jim Struzzi (R-Indiana), who led the opposition to RGGI, criticized the program’s inclusion in the budget. He said Shapiro doesn’t have a plan to address potential job losses or increased energy prices that could result from plants shutting down. 

The Power PA Jobs Alliance, whose members sued over RGGI, took the program’s presence in budget documents as a signal this administration will pursue it. 

In a statement, the group said it had hoped Shapiro would distance himself from Wolf’s signature climate initiative given his “oft-stated skepticism regarding RGGI, and its impacts on blue-collar union jobs and low- and fixed-income families struggling to pay historically high energy prices.”

Environmental groups encouraged

Some environmental groups were encouraged to see RGGI in the budget. 

“We have a clear and present opportunity to supercharge the state’s clean energy economy by maximizing benefits from the Inflation Reduction Act and implementing the Regional Greenhouse Gas Initiative to build a cleaner, more equitable future for all Pennsylvanians,” said Jackson Morris, a senior adviser to the Natural Resources Defense Council Action Fund.

What to do with RGGI’s proceeds

The projected $663 million raised from allowance auctions would not go to the state’s general fund, but would be restricted to the Clean Air Fund, which can only be used to reduce air pollution. 

The General Assembly could pass a law that would divert money from the Clean Air Fund to other initiatives, such as economic development or job training for displaced workers, but lawmakers in the Republican-led legislature declined to take up such proposals in the last session. 

Democrats now control the House, but so far have not introduced a plan for RGGI funds. 

Shapiro is planning to convene a working group of people from all sides of the RGGI discussion to chart a path forward for his administration. 

The proposed budget says the estimated RGGI proceeds would leave the state well-positioned to help support communities and employees impacted by the energy transition, while investing in greenhouse gas abatement, energy efficiency and clean and renewable energy programs.

Other environmental priorities

Shapiro’s environmental remarks in his address focused on areas where there’s more bipartisan support. 

He said his administration will continue to demand accountability from Norfolk Southern after last month’s train derailment and controlled chemical burn near the Pennsylvania border caused many in the area to complain of poor health effects. 

Shapiro is also prioritizing plugging abandoned oil and gas wells, already a target for federal cleanup dollars. Shapiro said it’s estimated that more than 350,000 orphaned wells across the state make up nearly 8% of Pennsylvania’s total methane emissions.

“We can’t ignore the science here. We have to be honest and connect the dots between that abandoned well leaking methane into our atmosphere and the impact it has on our people. That methane contributes to rising temperatures and more frequent storms,” Shapiro said.

Robert Routh, an attorney with Clean Air Council, said it was “encouraging” to hear Shapiro commit to work on plugging wells. “I would note that methane also leaks across every segment of the [oil and gas] supply chain from active infrastructure,” he added. 

Shapiro briefly mentioned the state’s attempt to secure a hydrogen hub. The federal government plans to award money to create these hubs to produce lower-carbon fuel for parts of the economy that are hard to clean up, like aviation and steelmaking. 

“We want the future of hydrogen to come through our Commonwealth,” Shapiro said. 

Last session, the legislature passed a law to incentivize development of a hydrogen hub. Environmental groups have said the effort could further entrench the fossil fuel industry by letting companies use natural gas to make hydrogen. Hydrogen is only emissions-free if renewable energy is  used to make it. 

Shapiro’s budget plan calls for a 9% increase for the Department of Environmental Protection. The proposal gives $5.75 million to DEP to hire 41 new staff members with the aim of increasing efficiency in permitting and expanding air quality testing and dam safety investigations.

Slow permit processing speed has been a consistent complaint from Republican lawmakers and industry groups. 

“To grow and sustain our economy, we need policies that support developing the state’s rich natural gas reserves and expanding energy infrastructure to improve access to affordable, reliable energy for consumers,” said Stephanie Catarino Wissman, executive director of the American Petroleum Institute in Pennsylvania. 

This story is produced in partnership with StateImpact Pennsylvania, a collaboration among The Allegheny Front, WPSU, WITF and WHYY to cover the commonwealth's energy economy.